Corel cuts workforce 22 per cent

Corel Corp. Wednesday laid off 22 per cent of its workforce in what the company described as a bid to regain profitability next year.

A spokesperson for the software firm said approximately 170 of the 220 employees are based

in its Ottawa headquarters. Corel said cuts were made across the board through all departments, affecting both full-time employees and contractors. The layoffs are effective immediately.

Corel has spent the past year trying to reposition itself among corporate enterprises with a brand strategy called DeepWhite while bolstering its flagship word processing software, WordPerfect. The company announced a slew of WordPerfect bundling deals with Dell and Hewlett-Packard, for example, and introduced a licensing program to boost sales through its channel partners. At the same time, it has beefed up its management team with the appointment of a new chief financial officer last month and a former Microsoft executive as its vice-president of enterprise sales.

Corel spokesperson Anne Vis said the layoffs would not change the company’s overall direction.

“”We’re going to continue with our strategy of driving revenue across all product lines. Today’s events have not affected our product development strategy or our overall corporate goals,”” she said. “”They’re advancing our corporate goals.””

IDC Canada software Warren Shiau said the cuts amounted to an admission that the company’s executives have not done anything to improve its cash-flow situation.

“”The things that they were doing may have increased their visibility in areas like office suites, but it wasn’t actually pulling in cash to the company, which is Corel’s problem,”” he said. “”If they have a market cap less than the cash they have on hand, it says something about how people view their situation.””

Joseph Chang, a Corel reseller at Phaselock Systems International in Ottawa, said his company has found success with WordPerfect by concentrating on the public sector.

“”The government business is up, definitely, for Corel,”” he said. “”This year we have actually increased Corel sales in the government.””

Vis said the cuts will ensure Corel will be able to stay afloat regardless of economic fluctuations.

“”We’ve looked at our current revenue pattern and budgeted our expenditures so they’re in line with those expectations,”” she said. “”We do still expect revenue for fiscal 2003 but we’re not counting on that to be profitable.””

Without de-emphasizing WordPerfect, Shiau didn’t rate Corel’s chances very high.

“”It’s just impossible,”” said Shiau. “”Microsoft has something like 95 per cent market share. They’re always going to be in the situation where they’re trying to get fringe customers — people who are so disgruntled by new licensing terms from Microsoft that they actually switch.””

Chang said he wasn’t worried about the layoffs affecting his relationship with the company, though he said his Corel sales rep has changed from time to time.

“”The level of service remains the same,”” he said. “”The government is a good customer for Corel . . . that’s not something you want to let fall by the wayside.””

Corel said the reduced payroll will save it US$12 million per year on an ongoing basis. The company will incur a one-time restructuring charge of between US$5.8 and US$6.3 million this quarter.


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